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Selling or buying the dip ?!

1246

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  • Howdy folks,

    The kid is selling. Sorry to be a downer but gee whiz folks, this is as frothy a market as I've ever seen or even heard of. BTD is akin to doubling down on your losing bet at the casino. Granted, I'm a momentum investor AND I have bought the dip a few times - '87 and the Gulf War, for example. This was more like buying the Crash. The difference is now, however, I see the risks far outweighing the potential rewards. Hell, we don't need a Black Swan event, we have the nightly news and it's ALL black swan. I liked Jeremy Grantham's outlook, although he's being a bit too optimistic.

    https://www.yahoo.com/news/legendary-investor-jeremy-grantham-says-104259678.html?guccounter=1&guce_referrer=aHR0cHM6Ly93d3cuYmluZy5jb20v&guce_referrer_sig=AQAAAAjSsNmuIEdYsi2i23Yzd7et9aMliiviWcZ4x24F7PxRP18FYK7VYZkPYkTi9LzS-A2z8iJZcQGQ8t9HSWXzx67I7XGiTgS88FsY0iTfvg7R9y0REf3p9AuYgSXJWCU-nhvGbsRKWrOLcwB4BqVfZOMMXtTppo0_XYsHCPgDXw2Q

    and so it goes,

    peace and wear the damn mask,

    rono
  • Amazingly, Grantham in the article says a 10% or more SPY drop is coming in the coming months. 10% or more is not news when it comes from Grantham. That is like Grantham’s breath. Sort of deflates the rest of the decent article.
  • I think all of the good news is priced into the market and then some. Trading at very high PEs based on last quarters "too good to be true" comparisons to the Covid disaster.

    There may be a bump as Covid recedes, but the angst in DC will be scarey enough to probably obscure this. Does anyone expect the GOP will not weigh to the last second before agreeing to increase the debt limit?

    The jobs report this Friday will probably be key for determining when the Fed will start to taper and how fast. If it is weak, they may hedge a bit and there will be a breather.

    It seems we are stuck between a rock and a hard spot. IF covid settles down, and people start buying, the supply chain and inability to find workers may keep inflation high, and increase the rate of the taper. If the economy slows because of more covid, people refusing to buy because they are worried about jobs and inflation, while it may slow the taper, it will soon suppress earnings and prices with it.
  • edited October 4
    The S&P 5c is down now 5.5% from the top, well under the 50d ma, and right at 3.3% more will hit the 200d ma. Doesn't look good at all on the simple technicals.
  • edited October 5
    In case anyone has NOT noticed this, the national biz media tends to get a wee bit overly excited about SMALL moves DOWN in markets. Break the 50 dma and there's probably gonna be a CNBC "Markets in turmoil" special coming pretty soon. Ring the registers!

    Yeah, many T/A's and investors gotta get back above the 50 to "feel safe" but several T/A guys/gals I read yesterday expressed that we'll likely be at new highs within a coupla weeks. A coupla weeks or a coupla months makes NO difference to me.

    FWIW, I welcomed yesterday's slightly DOWN day to continue to build my ITOT position that I recently started but didn't get fully funded by last THU. I've recently revamped my port and started a new 5-yr portfolio effective 10/01/21. So I'm reasonably certain the BTD moves I've made in the past few days will be MUCH higher in the 5 years they'll be invested there. And the seed came from either cash, maturing CDs, and/or bond OEF sale proceeds. So there's that.

    The biggest questions EVERY investor who reduces stock allocations during smallish pullbacks (like this one) and plans to re-deploy back into stocks later needs to ask is:

    Am I sure the market is headed DOWN further?
    Did a bell ring at the interim top?
    Where am I going to park these proceeds?
    Is that interim parking spot anywhere near the LT investment as the stocks I cashed them from?
    WHEN does my crystal ball tell me will be the best time to re-deploy the parked proceeds back into the market?
    Have I been successful with these market timing moves before?
    Will I be ready when the time is right this time?
    Will a bell ring when it's time?
    What is my history/odds of timing this thing right on both the "Run and hide" AND "Get back in the game" moves?
    And the BIGGIE: WTF do I do if I whiff on my re-deployment timing and the market moves HIGHER, or god forbid, significantly HIGHER than where it was when I ran and hid?
    Is there NOT a better strategy than this one?

    I employed the "Run and hide" and "Get back in the game" strategy for a while in hopes (ugh, that unviable investment strategy Art Cashin learned about over 50 years ago and routinely reminds us of ) to score a nirvana moment like dumping ALL of my money back IN the market on a day like March 20, 2020.

    What's that infamous Peter Lynch quote again on this topic?

    FWIW, I currently employ the BTD strategy that has been working flawlessly (for me at least) since the 2020 crash and I feel safe continuing to do it for the next 5 years.

    Disclaimer: We're 65, retired for about ten years, have SS and pensions, have 96% of our port in tax-deferred a/c's, have NOT paid a dime in FIT/SIT since retiring in 2012, and have more $ than we're probably ever to be able to spend. But we're gonna start trying! YMMV.
  • edited October 5
    When Washington enters the irrational bats--t crazy phase as it is right now, it's good to be prudent. Trim or sell if you want to lock in gains or preserve capital, do something, do nothing ... do whatever lets you sleep well at night.

    Everyone says DC will avoid a default at the 11th hour and 59th minute, and I suspect that's why the markets have been fairly tame when the debt ceiling is in the headlines these days. But given the insane nature of things around this town, I really can't help wondering if "this time is different" and their brinksmanship will backfire on them -- and us.

    As for me, I'll buy into any crash and perhaps trim a bit of things to lock in gains and/or TLH going into Q4. But that's not panic, that's prudence and fairly normal investment management.

  • Well now, MY CRYSTAL BALL shows we get another -5% drop from here before resuming the march upwards. What makes it fun is that nobody ever has a clue what really comes next.

    It would be a good thing for equity valuations to calm down a bit, though. Whatever the excuse for a further drop, it would be healthy.
  • The best explanation I have heard for the GOP filibuster of the debt ceiling vote, is that McConnell wants to force the Dems to use reconciliation to increase the debt ceiling. He has already said that he will force them to be the lone votes on debt ceiling, so he is filibustering to force it to go via reconciliation.

    The reason this matters is that apparently only one reconciliation bill is allowed per fiscal year, but it is not clear how much can go into that and how long it takes. I have read it can take two weeks or more, and there are recesses scheduled for Columbus Day.

    So the "progressives" who are objecting to the cheaper versions of the "Social network" bills that would presumably also have the debt ceiling in it, are delaying the entire reconciliation process, and may delay it past the time when it is possible.

    If this happens we really go to the "other guy blinked first" mode as it will require GOP to be scared enough that they will be blamed for Armageddon that they cave on the filibuster.

    Interest rates on Treasury bills coming due in the next month are already rising to reflect the increasingly likely ( but still unlikely) possibility of default.

    This could make Temper Tantrum look like a picnic
  • stillers said:

    In case anyone has NOT noticed this, the national biz media tends to get a wee bit overly excited about SMALL moves DOWN in markets. Break the 50 dma and there's probably gonna be a CNBC "Markets in turmoil" special coming pretty soon. Ring the registers!

    I'm simply reporting on a level below the 50 that we haven't seen in quite a while. There is NOTHING definitive about what's happening. What you do with the info is your business. PERIOD.

    I'll stop shouting in caps if you agree to do the same.
  • edited October 5
    sma3 said:

    Interest rates on Treasury bills coming due in the next month are already rising to reflect the increasingly likely ( but still unlikely) possibility of default.

    From Y Charts:

    “The 1 month treasury yield is included on the shorter end of the yield curve. The 1 month treasury yield reached 0% in late 2008 as the Fed lowered benchmark rates in an effort to stimulate the economy. 1 Month Treasury Rate is at 0.06%, compared to 0.06% the previous market day and 0.09% last year.”

    Well, it may be so that rates have risen. But I’m still not ready to back up the truck and start buying.

    If my math is correct, $100 invested at 0.06% will net you 6 cents in a year’s time. In contrast, on just about any day you can stroll along a Michigan highway and collect discarded beverage cans and bottles which are redeemable immediately for 10 cents each.
  • edited October 5
    Event based markets are difficult to bet on, especially when the event is 2 weeks away. Small and micro caps are in red today. So, it is not full on risk, notwithstanding a decent up day in large cap averages.
  • edited October 5
    BaluBalu said:

    Event based markets are difficult to bet on, especially when the event is 2 weeks away. Small and micro caps are in red today. So, it is not full on risk, notwithstanding a decent up day in large cap averages.

    Yep. Anybody’s guess how it will all play out. Not only the debt question, but Evergrande and a lot of other newsworthy issues. I’d expect a “relief bounce” in many markets lasting a day of two if / when the debt issue is settled. However, I still think the path of least resistance near term is down - if we’re talking about the major indexes. That’s not to say some individual stocks and sectors won’t do well.

  • edited October 5
    AndyJ said:

    stillers said:

    In case anyone has NOT noticed this, the national biz media tends to get a wee bit overly excited about SMALL moves DOWN in markets. Break the 50 dma and there's probably gonna be a CNBC "Markets in turmoil" special coming pretty soon. Ring the registers!

    I'm simply reporting on a level below the 50 that we haven't seen in quite a while. There is NOTHING definitive about what's happening. What you do with the info is your business. PERIOD.

    I'll stop shouting in caps if you agree to do the same.
    That's life on the internet pretty much all the time/Life in America in 2021...

    Um, I was NOT (sorry for the emphasis here but I can't say it's not necessary since you are incorrectly blasting me) responding directly to you.

    It was a general comment (as noted by my SPECIFIC use of the word "anyone") based on the scores of articles and posts I've read during the recent Dip/Diplet.

    If I'm responding directly to you, I'll quote you.

    BTW, it's not shouting with me, it's emphasis. I learned from three decades of communicating directly to senior management of many firms that people many times (1) don't read what was written, I mean literally, they don't read it, (2) many times do not open links and if they do they read only the headlines and/or first para, and (3) miss the main points of what is written unless they are bolded or capitalized.
  • @stillers: Please do not insult the typical MFO poster by suggesting any equivalency with "senior management".

    Thank you.
    OJ
  • edited October 5
    hank said:

    BaluBalu said:

    Event based markets are difficult to bet on, especially when the event is 2 weeks away. Small and micro caps are in red today. So, it is not full on risk, notwithstanding a decent up day in large cap averages.

    Yep. Anybody’s guess how it will all play out. Not only the debt question, but Evergrande and a lot of other newsworthy issues. I’d expect a “relief bounce” in many markets lasting a day of two if / when the debt issue is settled. However, I still think the path of least resistance near term is down - if we’re talking about the major indexes. That’s not to say some individual stocks and sectors won’t do well.
    Well, for many it goes a bit beyond guessing.

    GoldmanSachs for one I trust uses some pretty sophisticated programs and their "guess" (if you can call it that) is for a S&P 9% gain in Q4.

    https://www.cnbc.com/2021/10/05/goldman-sachs-sees-a-big-4th-quarter-with-a-9percent-sp-500-gain-from-here.html

    =======================

    Having been an auditor/audit manager for 30+ years, I'm pretty anal about words as I've seen one incorrect word in a FS footnote can change a person's interpretation of a company's entire financial outlook. (I know, I've read that incorrect "one word" many times and sadly applied ones myself more than I care to remember.)

    "Relief bounces" or more commonly "Relief rallies" are generally associated with secular bear markets:

    https://www.investopedia.com/terms/r/relief-rally.asp

    FWIW, IMO, this is NOT a "relief rally" an I've NOT heard a single person in the biz refer to it as that. Just sayin'.
  • Old_Joe said:

    @stillers: Please do not insult the typical MFO poster by suggesting any equivalency with "senior management".

    Thank you.
    OJ

    No comprende.
  • edited October 5
    @stillers said:

    GoldmanSachs for one I trust......

    This is where you lose me. GS knows how to make money for GS, but that does not imply that they give out their best proprietary information (or important guidance) to the general public. Nor does any brokerage house.
  • edited October 5
    Delete
  • edited October 5
    Hey STIllers - Don’t change my words. I said relief bounce. You said relief rally. So, unless your reading in INVESTOPEDIA mentions specifically “relief bounce” don’t tell me I’m wrong. Bounces to me are the opposite of dips. As far as Goldman Sachs goes, it’s nice of them to hand out all that free analysis for we common folks. Kinda wonder what they tell their high dollar clients. Same advice?
  • edited October 5
    Hi @stillers
    BTW, it's not shouting with me, it's emphasis. I learned from three decades of communicating directly to senior management of many firms that people many times (1) don't read what was written, I mean literally, they don't read it, (2) many times do not open links and if they do they read only the headlines and/or first para, and (3) miss the main points of what is written unless they are bolded or capitalized.
    AGREE (but not shouting, meaning emphasis).

    Too many times, especially when companies really started using pcs/laptops for all employees, that folks didn't seem to read as well as from printed text.
    I still CAP some words for emphasis and more so with text messages so the full meaning is NOT missed.
    And here, unless doing a general reply to a thread; I will direct a statement or question to an individual(s).
  • edited October 5
    JD_co said:

    @stillers said:

    GoldmanSachs for one I trust......

    This is where you lose me. GS knows how to make money for GS, but that does not imply that they give out their best proprietary information (or important guidance) to the general public. Nor does any brokerage house.
    What I said was

    GoldmanSachs for one I trust uses some pretty sophisticated programs and their "guess" (if you can call it that) is for a S&P 9% gain in Q4.


    Well I happen to pay the BIG bucks for a coupla newsletters (not GS) and they're saying pretty much the same thing.

    Still lost?

    If you know the history of the S&P's average annual path since 1950 as compared to this year's and that over 70% of semis stocks are already in Correction mode, you know that given that history and the current state of BIG tech, a 9%-10% move UP in Q4 2020 is a REAL possibility. And as I and people in much higher pay grades than me are saying, is likely.

    And FWIW on the free stuff, GS is not alone in projecting a Q4 move UP:

    https://www.marketwatch.com/story/rate-fears-just-another-white-knuckle-moment-for-tech-stocks-says-this-analyst-whos-forecasting-rebound-of-at-least-10-11633427803?siteid=yhoof2

    Excerpt:

    ...To closely followed tech analyst Dan Ives of Wedbush Securities, this is just a “white knuckle moment” that will soon pass. Ives says the worries around rising yields and growth stock valuations will give way to a year-end rally of at least 10% in the tech space...
  • edited October 5
    hank said:

    Hey STIllers - Don’t change my words. I said relief bounce. You said relief rally. So, unless your reading in INVESTOPEDIA mentions specifically “relief bounce” don’t tell me I’m wrong. Bounces to me are the opposite of dips. As far as Goldman Sachs goes, it’s nice of them to hand out all that free analysis for we common folks. Kinda wonder what they tell their high dollar clients. Same advice?

    I didn't change your words. I was simply differentiating.

    Nobody (until now) knew that YOU have apparently coined a phrase that (1) likely only YOU use and (2) sounds VERY close to a commonly used industry phrase with a SPECIFIC meaning in the industry.

    FWIW: The "relief" in "relief rally" is investor "relief" from the on-going beat downs in a bear market. We're in a STRONG, LONG cyclical bull market. So USING the phrase "relief bounce" in conversation or print, in reference to this market, would need to be explained to the learned person/investor.

    And you did. So let's just move on with this last thought from me on this:

    If was me, and it ain't, I'd simply say "bounce" and leave the "relief" out during a cyclical bull market.

    ==================================================

    See my other most recent post about Q4 projections.
  • stillers said:
    Still lost?
    When I said that you lose me, that didn't mean I was ever lost.

    You pay "BIG bucks" for brokerage newsletters, knowing full well that its in their best interests to always paint a rosy picture for retail investors. Of course they all agree. How great is the accuracy of such projections?

    With exception of early 2020, its been working out just fine recently. "Let's just keep that gravy train moving". But they aren't going to ever tell you when the train tracks end.
  • edited October 5
    catch22 said:

    Hi @stillers

    BTW, it's not shouting with me, it's emphasis. I learned from three decades of communicating directly to senior management of many firms that people many times (1) don't read what was written, I mean literally, they don't read it, (2) many times do not open links and if they do they read only the headlines and/or first para, and (3) miss the main points of what is written unless they are bolded or capitalized.
    AGREE (but not shouting, meaning emphasis).

    Too many times, especially when companies really started using pcs/laptops for all employees, that folks didn't seem to read as well as from printed text.
    I still CAP some words for emphasis and more so will text messages so the full meaning is NOT missed...
    Glad you get the whole emphasis thing.

    THIS IS SHOUTING!!! THIS is emphasis.

    And yep, LOTS has changed with technology and LOTS of it ain't so good for us. (No, I am not related to the Unabomber.)

    A way, way too educated, very close friend is schooling me on what he (at least) refers to as "liquid intelligence." (That might be one of his or his guru's phrases. I dunno. Online I only see fluid and crystalized intelligence.)

    My buddy claims that we, who actually DO read, read SO much SO fast online these days, and we think we are improving our intelligence and/or wisdom with all that intake.

    But truth be told, we are failing miserably on all that as the "liquid intelligence" that we score though all that reading does NOT routinely get converted to I and/or W.

    Think it through.

    Think back to the last five articles you read TODAY. Think of what you remember as the FACTS and/or MAIN POINTS of those articles.

    Then go back and re-read them. Check yourself. How did you do? Maybe pretty good. Maybe not so good. And if you spoke to people TODAY about what you read, you may have sounded pretty intelligent, crap, maybe even wise, about those topics. Maybe not so much.

    Now next week start talking to someone IN DETAIL about those exact same five articles. Tell them the FACTS and/or MAIN POINTS of what you read. How did you do this time?

    If you didn't write them down, will you even remember what they were about in say a month from now when you try to re-test yourself? Good luck with all that.

    I've tried this a coupla times. If it was financial or sports related, I did VERY good on the day I read the stuff. And I still pretty good a week later. A month later, not so good. (Read, "Failed miserably.")

    On other stuff NOT related to finance or sports, the next day and a month later, as Sgt Schultz of Hogan's Heroes fame might say, "I know nothing!" Yep, that "liquid intelligence" easily passed through me.
  • Here's one (free) T/A's (who I follow regularly) take on the S&P. It's pretty basic stuff but (FWIW) it is consistent with the T/A I pay for.

    Take it or leave it. YMMV.

    https://www.fxempire.com/forecasts/article/sp-500-price-forecast-stock-markets-continue-same-consolidation-784476
  • @stillers : "A way, way too educated, very close friend is schooling me on what he (at least) refers to as "liquid intelligence."

    That goes hand -in-hand with use it or lose it !
    Stay Kool, Derf
  • edited October 7
    BOT a wee bit more ITOT near the Open yesterday before the market recovered. Also added to VGWAX before yesterday's close to catch the expected uptick in foreign markets today. That may do it for me for on BTDip/Diplet activity for the time being at least.

    So...

    Fear is subsiding. Major averages will be back within ~1% of their 50dma's at the Open today. This of course ain't over until it the S&P for one breaks above its 50 and stays there this time.

    Here's free FX T/A from this AM:
    https://www.fxempire.com/forecasts/article/e-mini-sp-500-index-es-futures-technical-analysis-decision-time-for-buyers-at-4399-75-4432-75-785432

    EDIT to add:
    And from after the close. Big day tomorrow.
    https://www.fxempire.com/forecasts/article/sp-500-price-forecast-stock-markets-get-boost-heading-into-jobs-number-785509
  • edited October 7
    Sold all my DOG yesterday morning with Dow down 400. Whew! Made a bit on it the past 5 weeks, but not something I’d want to cling to. Markets can remain irrational longer than most of us can remain solvent.
  • Its been a weird month where Energy boomed and everything else was sorta sagging.

    1 MONTH RELATIVE PERFORMANCE
    -6.3 % Healthcare
    -5.3 Real Estate
    -5.3 Utilities
    - 5 Basic Materials
    -4.2 Communication Services
    -4.2 Technology
    -3.7 Consumer Defensive
    -2.5 Consumer Cyclical
    -1.5 Industrials


    +13.9 Energy
    + 1.6 Financial

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